ITRI looks to establish patent lawsuit war chest

Staff Writer with CNA

Taiwan’s top industrial research body plans to adopt three main strategies to help smartphone maker HTC Corp (宏達電) and other local IT firms counter international patent lawsuits, officials said yesterday.

The Industrial Technology Research Institute (ITRI, 工研院) plans to raise at least NT$100 million (US$3.45 million) by the end of the year as a first step in its campaign to help local high-tech businesses defend themselves against patent infringement lawsuits.

The three approaches include obtaining international patent rights, pushing for the annulment of competitor’s patents and shifting the battlefield from the US to China, said ITRI officials, speaking on condition of anonymity.

Saying that roughly 30 percent of patents challenged in infringement suits were found to be invalid in the US, ITRI officials believed that filing annulment suits could prove to be a more practicable and economical approach than buying patents.

As for moving the battleground to China, ITRI officials said legal action has become a business strategy used by corporate giants to expand market share and stifle the advances of competitors, as has been the case in the battle between Apple Inc and HTC.

As a result, ITRI expressed the option that the most advantageous battleground for local firms would be China, where Taiwanese firms have invested heavily and patents only cost one-tenth the price of those in the US.

By obtaining patents in China, Taiwanese businesses would then be able to block the sale of competitors’ products that violate those patents, helping to increase the market share of Taiwanese companies in China and thereby reinforce their global position, the officials said.

However, it was emphasized that ITRI would not allocate state funds to the initiative to avoid politicizing the process.

The organization expected to eventually raise somewhere between NT$500 million and NT$1 billion from IT companies such as as HTC, AU Optronics Corp (友達光電), Hon Hai Precision Industry Co (鴻海精密), Asustek Computer Inc (華碩電腦) and Acer Inc (宏碁) to finance the lawsuit war chest.

It would then collect an annual fee from local firms to continue the operation.

“It [filing patent lawsuits] is one of the weapons used by electronics companies to fend off competition ... and as such it is important for us to expand our patent portfolio,” Acer chairman J.T. Wang (王振堂) said last month.